Nadir Mohamed is stepping down as the chief executive officer of Rogers Communications, leaving the telecommunications and media giant in search of a new leader at a critical time for the industry.
Mr. Mohamed will leave his post in January 2014, about five years after taking over for founder Ted Rogers. He was seen as a steady hand who could ably manage the company following the death of the legendary Mr. Rogers when he was handed the top job in 2009. But after years of rapid growth, the company has had a harder time in recent years as new competition has emerged in wireless, its largest business.
He joined the company in 2000, serving as its chief operating officer until he ascended to chief executive officer. Rogers said it will appoint a search committee to “begin an international search” for his replacement, adding that neither Edward nor Melinda Rogers would put their names forward to follow in their father’s footsteps.
“I feel very good about where the company is at. It is in terrific shape. Frankly, from a financial point of view, if you look at our balance sheet, it probably has never been better,” Mr. Mohamed said in a telephone interview late Thursday. “The operations are in great shape and it really feels like it is a good time to pass the helm over to the next generation of leadership.”
He also strenuously denied speculation that he had been pushed out of the CEO role by members of the Rogers family.
“Absolutely categorically my choice ... I know it sounds like I am repeating, but I’m really feeling good about our achievements over the last 12 years as a team. So, (I am) very proud of what has been accomplished. It feels right.”
Although Mr. Mohamed has not firmed up his retirement plans, he’d like to contribute to broader Canadian community, including working with Ryerson University’s Digital Media Zone.
“I actually grew up in Tanzania, East Africa, and our family came to Canada in ’71 and like many immigrants, I feel very blessed to have been in Canada – all that it has offered to us as a family,” he said. “So, I am really hoping, to be honest, to do more in the community and hopefully get a chance to contribute for the greater good in terms of Canada and what it can do.”
RBC Dominion Securities analyst Drew McReynolds said in a research note Friday that Mr. Mohamed’s decision is a bit of a surprise but that his departure most likely will not be disruptive to the company.
“Although this announcement comes a few years earlier than we expected, we would expect a constructive transition,” he said.
The company released the news late Thursday along with its fourth quarter results, which came with an unexpected bonus for shareholders in the form of a 10 per cent increase to the company’s dividend as its adjusted quarterly profit jumped 30 per cent to $455-million. It also said it would repurchase up to $500-million of its own shares.
Under his watch the company made one of its highest profile acquisitions in its history, partnering with rival BCE Inc. for equal stakes in Maple Leaf Sports and Entertainment, owners of sports franchises such as the Toronto Maple Leafs and Toronto Raptors, for $1-billion. That provided the company with more content for its sports channels for years to come to complement its ownership of the Toronto Blue Jays.
Mr. Mohamed has guided the company through a period of cutthroat competition – Rogers has seen its share of the cellphone market steadily decline since his appointment as a series of lower-cost competitors emerged and forced the company to lower its prices to compete.
And while its average revenue per mobile user decreased, BCE Inc. intensified its push into the television market, winning customers from cable companies such as Rogers with aggressive pricing on its Fibe television product.
By the end of this year, BCE expects to have its Fibe service available in some 3.3 million homes. That’s a significant threat to Rogers, because each of those homes would have previously needed to install satellite dishes to receive Bell’s services but will now be able to switch to a new television service without purchasing any new equipment.
In the fourth quarter, Rogers said it had 2.2 million cable subscribers after losing 25,000 of them (19 per cent more than it lost in the same quarter a year ago).
Prior to joining Rogers, where he held a series of increasingly high-profile positions, Mr. Mohamed served as senior vice-president of marketing at Telus Corp, as well as a series of positions at BC Tel and BC Tel Mobility.
"Nadir is a highly regarded executive who has delivered strong results and substantial value for more than a decade," the company’s chairman Alan Horn said in the statement. “Thanks to his disciplined and strategic management approach we've strengthened our core business, solidified our financial position and set Rogers up for long-term success. The board is grateful for his significant contributions and looks forward to working with him to ensure a seamless and orderly transition.”
The company said Thursday that profit for its fourth quarter increased 7 per cent, with a 3 per cent increase in its wireless division and a 4 per cent increase at its cable division. Its media division, meanwhile, saw profit increase by 70 per cent because it didn’t need to pay the National Hockey League content fees because of the lockout.
Mr. McReynolds said fourth-quarter revenue of $3.26-billion and earnings before interest, taxes, depreciation and amortization (EBITDA) of $1.17-billion exceeded his estimates of $3.2-billion and $1.13-billion, respectively.
Earnings per share of 88 cents on an adjusted basis beat his 70 cents EPS estimate and analysts’ consensus of 71 cents, he said.
He pointed to some softness in subscriber growth, but wireless average revenue per unit (ARPU) – a measure of how much money is made from the average user – of $69.75 came in much stronger than anticipated, he said.
Churn, or customer attrition, was also better than expected in the quarter, at 1.40 per cent, he added.
With a file from Bertrand Marotte